BetaKit covered Des Moines, IA-based Dwolla recently when it launched its MassPay feature to help merchants pay up to 2,000 recipients at once, and today the payment processing platform announced its latest update, a guest checkout solution that lets anyone make a payment, regardless of whether they’re a Dwolla user. The new option was motivated by Dwolla’s goal of eliminating the need for a shared link to process a transaction, for example merchants who accept American Express paired with consumers who have American Express credit cards.

“One of the things we’ve come to understand is that there are all these preconceived notions that build mental constraints along the way of building a payment network. One of them is this idea is that both people trying to exchange money have to have some sort of common bond,” said Director of Communications Jordan Lampe in an interview with BetaKit. “What we’ve done is taken a step back…we kind of realized in creating an ideal transaction, we have to eliminate as many pain points as possible. What we came to understand is that forcing people to have a Dwolla account to send money from their bank account was becoming a pain point.”

Merchants using the Dwolla platform can now process payments from non-Dwolla users via the guest checkout page. When a guest checks out, they’re routed to Dwolla’s offsite gateway where they fill out their basic information and verify their phone number. They can then use Dwolla to connect to their financial institution, review the transaction, and pay. In addition to the new guest checkout, the company also announced that it has integrated with iPad point-of-sale (POS) providers Shopkeep and Change to let merchants initiate transactions. Whereas before a user would have had to open up the Dwolla app, find the merchant, enter the amount, and hit pay, with the new backend integration, merchants can send a push notification with a preset amount that users authorize to pay.

Lampe said these new additions are designed to further incentivize brick-and-mortar merchants to start using its payment platform, which charges them $0.25 per every transaction worth more than $10 and is free for any transaction under that amount, lower than typical credit card processing fees which are around 2.75 percent. To educate consumers about how credit card processing fees increases costs for all parties involved, it is asking merchants to promote Dwolla by introducing a Dwolla price, where they would discount an item by half of what they save in credit card fees. For example, if a product sells for $100 and their credit card processing fee is three percent or $3, they would discount the item by $1.50 (minus the $0.25 Dwolla transaction fee) making the item $98.75.

“The merchant is still getting 1.5 percent back and then rewarding the consumer with the other half…it’s an education point. If I’m a consumer and I don’t know the difference between paying with a card, versus a check, versus cash, it doesn’t matter what I choose,” Lampe added. “In that, the public is unaware of what’s called interchange and the cost of the payment network, because they don’t need to worry about it. They’re not encumbered with the fees, the prices, and the details so when they start seeing this price comparison of ‘pay with Dwolla’, it’s cheaper, or pay with your credit card, it’s more expensive, it starts training the mind to ask how can they do this, and why are credit cards more expensive?”

BetaKit also recently covered a funding announcement by Finland-based team banking provider Holvi as it prepares to launch across Europe in 2013. Another startup, SMS-based payments platform Seconds, partnered with Dwolla for bank account payments to further streamline the buying process by sending a text message to purchase an item. Uses like that are exactly what Dwolla hopes to encourage, and although it will continue releasing new features, its true aim is to be a platform for developers to build products and services that continue to shake up the financial services industry. Its bank-linked payments platform provides an alternative to PayPal, credit card-powered payment platforms like Stripe, and mobile payments solutions like Square. But whether non-Dwolla users will get on board with Dwolla’s guest checkout option rather than using a credit card, especially because entering a credit card number will take fewer steps than linking a financial institution, remains to be seen.

Humayun Khan is a Senior Writer and Analyst at BetaKit. A marketing graduate with honors, Humayun's work experience spans the fields of consumer behaviour with noted contributions in an academic paper published in the Journal of Consumer Psychology and market research consulting having coordinated projects for a major financial services client at Decode Inc. More recently he was involved in business strategy as a Business Analyst for an equipment rental outlet and prior in the National Marketing Department at Ernst & Young LLP. He is passionate about emerging and disrupting technology and its ability to transform and create entirely new industries.